Legislative & Regulatory Updates

In Revenue Procedure 2016-28, the Internal Revenue Service announced new limits for contributions to Health Savings Accounts (HSAs) and definitional limits for High Deductible Health Plans (HDHPs) that will be effective for the 2017 calendar year. These moves are the inflation adjustments provided for under Internal Revenue Code 223. The only change from the 2016 limits, as shown in the chart below, is a $50 increase in the limit for contributions to an HSA for self-only coverage under an HDHP.

For individuals with self-only coverage under an HDHP, the annual contribution limit to an HSA is $3,400 and for an individual with family coverage, the HSA contribution limit is $6,750.

An HDHP for the 2017 calendar year is a health plan with an annual deductible that is not less than $1,300 for self-only coverage and for family coverage it's $2,600. 2017 annual out-of-pocket expenses (deductibles, co-payments and other amounts, excluding premiums) cannot exceed $6,550 for self-only coverage and $13,100 for family coverage.

The Revenue Procedure was published on April 29, 2016.

HSA AND HDHP LIMITATIONS

2017

2016

HSA Contribution Limits

(Employer + Employee)

$3,400 – Individual

$6,750 – Family

$3,350 – Individual

$6,750 – Family

HDHP Deductible Limits

$1,300 – Individual

$2,600 – Family

$1,300 – Individual

$2,600 – Family

HDHP

Out-of-pocket Limits

$6,550 – Individual

$13,100 – Family

$6,550 – Individual

$13,100 – Family

No change was announced to the HSA catch-up contribution limit. If an individual is age 55 or older by the end of the year, they can contribute an additional $1,000 to their HSA. If married, and both are age 55, each individual can contribute an additional $1,000 into his or her individual account.

Remember that an HSA is an individual account. In the situation of a married couple with family coverage, they must have two HSA accounts if they want to contribute the maximum $8,750. The maximum contribution cannot be hit with only one account. One individual would contribute the family coverage maximum plus his or her individual catch-up, and the other would contribute the catch-up maximum to their individual account.